The Ultimate Guide to Multifamily Property Management

[Transcript Summary] Welcome to the ultimate guide for multi-family property management! If you’re an investor seeking to boost profits, enhance tenant service, and facilitate your investments, you’ve come to the right place. In this video, we will delve deep into various topics, so stay tuned as we share valuable insights with you.

Welcome back, everybody, to Money Mondays! Here, we release new content every Monday to empower you as an investor. And if you prefer to let us handle the hard work, consider investing with us. At Disrupt Equity, we manage over $700 million in assets and have successfully bought and sold over 5,000 units across Texas and the Southeast, achieving an impressive average annualized return of 25%+.

This Importance of Property Management 

Now, let’s discuss the importance of property management. Having an effective property manager is crucial for any investment. They can make or break a deal, as they essentially operate a multi-million dollar business. Whether you own a property with 100, 200, or 300 units, professional property management is essential. They know how to lease, handle maintenance, manage tenants, and create a positive experience for all residents. Therefore, choosing the right property management company is of utmost importance.

Track Record and Experience

When selecting a property management company, there are key questions you should ask. First and foremost, inquire about their experience with the specific asset class and submarket you’re dealing with. If they primarily focus on Class A deals but lack experience in managing Class C workforce housing properties in DFW, they may not be the right fit. Just as managing a laundromat differs greatly from managing a McDonald’s, relevant experience is crucial for success. Consider their past track record and if it aligns with your business plan.

One important aspect to consider is the track record of success in the business plan you’re aiming to achieve. Certain deals require significant value addition, thus it becomes crucial to have the right property management company and property manager in place. Since there are various activities involved, such as upgrading units, painting, and managing roofs, you need a manager who is experienced in handling a class C Workforce and value-add properties, rather than someone accustomed to dealing with less demanding properties. It’s essential to ensure that they have relevant experience not just in the submarket and asset class, but also in the specific type of property business plan you’re pursuing. Additionally, it’s important to recognize that different properties have different purposes, whether it’s providing clean and affordable housing or creating a sense of community. Therefore, you need to find the right manager who understands these nuances. Another key attribute to look for in a manager is their financial acumen. They should possess a comprehensive understanding of the financial aspects, as managing a property involves more than just leasing—it’s a complete operation that impacts the bottom line. At our management company, we prioritize training our managers to comprehend their financials and actively participate in the process, enabling them to handle weekly calls and address ownership’s queries with insights from a financial perspective. 

Clear Communication and Reporting

Choosing a property management company and team that truly grasp these crucial factors is paramount as it profoundly affects your surroundings. One vital aspect not to overlook is the communication between you, as the property owner, and the property management company. Ensuring both parties’ expectations align is necessary. If you desire regular communication and constant updates, it is imperative that your property management company shares the same mindset. Don’t settle for a company accustomed to monthly conversations and a solitary financial report. Clear communication expectations should be agreed upon from the outset to avoid disappointments. When selecting the right property management, upfront alignment of expectations is key to avoid receiving subpar service. Once you have made your choice, it becomes crucial to establish your business plan, budget, and investor return expectations. This is where many people stumble when working with a property management company. It’s essential to bridge the gap between your expectations and the company’s return profile or budget, ensuring they align harmoniously. 

ROI to Investors

Begin by establishing a budget and clearly communicating the goal of delivering returns to investors. Then, focus on effectively managing the budget, seeking opportunities for economies of scale, streamlining expenses, and maximizing rental income. Collaborate closely with the property management company, aligning your business plan with their expertise and leveraging their alternative perspectives. Remember, a successful business plan is a harmonious fusion of ownership’s vision and the property management’s insights. Execute the plan diligently, optimizing expenses, boosting revenue, and ultimately increasing the net operating income (NOI). Cultivate a strong relationship with the property management company, as their financial acumen plays a vital role in achieving success. Dive deep into the details of the plan, going beyond the surface-level objectives, and craft a comprehensive budget that accurately reflects the agreed-upon business plan. By doing so, you can effectively measure success on a monthly basis.

Property Management Execution of Business Plan is Key

Property management is key when it comes to executing a business plan. A great property manager will have experience and expertise in the areas of leasing, budgeting, legal compliance, tenant relations and maintenance. By leveraging their knowledge, you can ensure that your business plan is implemented with precision and efficiency. Additionally, they can offer valuable insights into local market trends and competiti  ve

Once you’ve figured out the management company and devised a business plan, execution becomes key. The ultimate goal is to create a comfortable living environment for tenants, which can mean safety, affordability, excitement, and more. Establishing and consistently applying standards is vital. A prime example is tenant screening. Is the management company screening tenants according to your target criteria? If you aim for top-tier tenants and rents, the screening process will be different from targeting the middle-of-the-pack crowd. Keep a close eye on your management company to ensure they maintain high standards. Trust their expertise, but verify by periodically checking in. Pressure from ownership to increase occupancy should never lead to compromised standards. You don’t want to regret it six months or a year down the line with the wrong tenants impacting your bottom line.

Curb Appeal

Lastly, the curb appeal plays a significant role in attracting upper echelon residents to your property. Make sure the property radiates attractiveness and curb appeal to entice them in.

It is crucial for property management companies to diligently maintain properties to ensure aoptimal speed, performance, and appeal. Attention to landscaping and curb appeal, particularly around entrances, pool areas, and along tour routes, is often overlooked but instrumental in attracting the right tenants. Neglected landscapes, abundant trash, and broken-down vehicles deter the desired level of residents. This realization prompted us to prioritize these details early on, as they play a vital role in working effectively with a management company. Additionally, fostering a sense of community and encouraging tenant referrals are equally essential. Tenants who feel connected to their living spaces will take better care of them and recommend the property to like-minded individuals. Building a genuine community leads to word-of-mouth referrals, nurturing an environment of high-quality standards. Therefore, alongside strategies employed to attract the right tenants, harnessing the power of referrals is invaluable in maintaining the desired level of residence. Once a business plan is established and the right expectations are set, it is imperative to comprehend what to anticipate from a property management firm. Typically, management companies provide weekly reports, also known as Monday morning reports, presenting key metrics and insights from the previous week. These reports serve as the foundation for weekly calls, during which the data is discussed in detail.

Additionally, regular financial reports such as income statements, balance sheets, rent rolls, and T12s are standard deliverables that anyone in this industry should expect. Understanding these reports is essential. Furthermore, on a yearly basis, it is important to develop a budget for the upcoming year. These three touch points form the core interaction between you and your property management company. Although there may be other aspects to consider, these are the key deliverables that you should anticipate when working with reputable professionals. In conclusion, this overview provides an introductory glimpse into the world of property management. 

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